With two wins from two races under their belt in the new Formula One season, Mercedes-GP are powering confidently toward another speedster’s paradise in Bahrain this week, albeit with a watchful eye on fast improving rivals Red Bull Racing.
Lewis Hamilton’s pole-to-flag victory on Sunday ahead of teammate Nico Rosberg looked comfortable in the scorching Sepang sunshine, but quadruple world champion Sebastian Vettel had managed to split the pair in a wet qualifying session.
The German Red Bull driver fell behind Rosberg before the first corner on race day in Malaysia but managed to push his compatriot for long periods before the gap widened in the final stages of the 56-lap race.
Vettel’s 15 points for third place were Red Bull’s first of the season and a jump in the right direction for a team that looked in disarray during winter testing after their Renault V6 power unit suffered reliability woes.
“The last day of testing was four weeks ago or something and they were absolutely nowhere and now he (Vettel) was right in the back of me, pushing me,” Rosberg told reporters after moving further clear in the drivers standings ahead of Hamilton.
“The way they’ve ramped up their pace, very impressive, so we need to keep on it to keep our advantage.”
Rosberg leads the drivers championship on 43 points, ahead of Hamilton (25) and Ferrari’s Fernando Alonso (24).
Vettel’s teammate, Daniel Ricciardo, also showed promising signs before a botched pit stop, damaged front wing and punctured tyre led to him retiring on lap 49.
Red Bull team principal Christian Horner was optimistic that they had made progress in bridging the gap on the Formula One pace setters.
“Considering where we were a month ago, to be on the podium with Sebastian in Malaysia in a dry race, is an incredible performance,” he said.
“We knew that we had some ground to catch up to the Mercedes, so to finish as close as Sebastian did today was a really positive performance and, while we know we’ve got a lot of work to do, we can begin to realise the scale of our challenge.”
Adding fuel to the Renault-powered revival was Russian rookie Daniil Kvyat grabbing 10th to give Toro Rosso a second weekend of points after both he and teammate Jean-Eric Vergne’s top-10 finishes in Australia.
Even struggling Lotus managed to finish a race, with Romain Grosjean ending in 11th in Malaysia.
However, they were all second best to Mercedes, whose pace on the quick Sepang straights was too much for the Red Bulls.
With similarly long straights awaiting them in Manama before they head to another Hermann Tilke-designed circuit in China after that, Horner was thinking small in the short term.
“Their advantage in Bahrain will obviously be bigger than it was here because that is a very power-dominated circuit,” he said.
“For Bahrain, I don’t think there is going to be a solution and it doesn’t tend to rain much in Bahrain so we are obviously going to try and make as much progress as we can in the week and hopefully we can nudge a bit closer to them.
“A lot of the issues are software-related so hopefully the steps can be made and we can close that gap down.”
For that reason, Hamilton knew it was vital to take advantage before the pack inevitably caught up, much like Jenson Button did en route to winning the 2009 championship with Brawn when his six race victories came in the first seven races.
Hamilton is also wary of allowing complacency to creep into the team, who claimed their first one-two since 1955.
Mercedes suffered reliability problems in the season-opening race which forced Hamilton to retire early after qualifying on pole in Melbourne.
“Its great to see Mercedes leading the championship but we know that we have to make these early races pay,” the Briton said after his 23rd career win.
“Anything can happen, as we saw in Australia.”
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
